Commonwealth Local Government Forum

Pacific \ Local government finance

Resourcing local government remains a central challenge to effective decentralisation. This section has content relating to different models of fiscal decentralisation, options for identifying new sources of local revenue, such as local property tax; and strategies for improving collection and deployment of own-source revenue. It also offers information about improving the borrowing potential of local government, innovative financing models such as municipal bonds, shared services, and public private partnerships.

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World Development Report 2019: The Changing Nature of Work

Pages 135-136 are on property tax. 'Another form of recurrent taxation that can be tapped for further resources in most developing countries is immovable property taxes. These taxes do not distort labor markets, human capital accumulation, or innovation decisions. Property taxes also provide a stable source of revenue that is less susceptible to short-term economic fluctuations and is difficult to evade. And although property taxes would likely not flow into federal social protection schemes (they are typically raised by local governments), they could fund regional or municipal social services or reduce the level of federal transfers to local governments. On average, high-income countries raise 1.1 percent of GDP from immovable property taxes. In middle income countries, these taxes yield about 0.4 percent of GDP.19 Yet property taxes represent untapped revenue potential for all countries. This revenue gap is estimated to be 0.9 percent of GDP in middle-income countries and as much as 2.9 percent in high-income countries.20 Governments in Sub-Saharan Africa are estimated to be missing out on revenues of 0.5 to 1 percent of GDP because of no property taxes whatsoever or their limited application.'
 

Author: World Bank Publisher: World Bank Publication year: 2018


The Challenge of Local Government Financing in Developing Countries

Cities are assets, solutions and drivers of economic and social development. Cities possess huge untapped economic potential that can and should be leveraged to create wealth and economic opportunities for all. This requires good urban planning that supports urban compactness, integration, and connectivity. However, even the best urban plans risk ending up unused if they are not accompanied by financial and regulatory strategies for implementation. Strategic public investments must go hand in hand with strategic funding mechanisms and supporting governance systems. The report also identifies successful governance mechanisms for efficient and equitable provision of public services in metropolitan areas of developing countries, and shares experiences and methods to making public service provision more viable in peri-urban areas of large cities and in smaller urban centres of these countries.

Author: UN Habitat Publisher: UN Habitat Publication year: 2017


Challenging times for local government in Labor’s new federation

The Australian Labor Party went to the 2007 election promising a new era of cooperative federalism that would end the ‘blame game’ between federal and state governments and re-energise reform and productivity agendas. On the evidence of the Council of Australian Governments (COAG) meeting on 26 March 2008, these agendas are advancing rapidly. The communiqué foreshadowed a raft of new commonwealth-state agreements, streamlined arrangements for special purpose grants and, perhaps most significantly,

 

Author: Graham Sansom Publisher: University of Technology, Sydney Publication year: 2008


Current developments in New Zealand local government

August 2007 saw the release of 'Funding Local Government', the report of the Local Government Rates Inquiry (available at www.ratesinquiry.govt.nz). New Zealand local government has one of the world's most flexible rating (property tax) systems. Councils may choose between capital value, land value or annual (rental) value. Rates may be levied primarily as an ad valorem charge but councils may also use a variety of fixed charges. In addition they may levy a targeted rate or rates, which may be either a fixed amount or ad valorem, charged on a single property or category of properties to recover the cost of a specific service or services. Councils also have the power, in consultation with their communities, to adopt highly flexible postponement policies allowing people to defer, indefinitely, payment of rates. (Normally when this is done, councils take a first charge on the property and recover interest at their marginal cost of borrowing.)

Author: Peter McKinlay Publisher: University of Technology, Sydney Publication year: 2008


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